Private Equity and Venture Capital
In Leaf Invenergy Company v. Invenergy Renewables LLC, the Supreme Court of Delaware considered whether an investment fund that invested in a company breached the investment agreement when the agreement prohibited the company from conducting a “Material Partial Sale” without the consent of the investment fund. The court held that the company engaged in a “Material Partial Sale” without consent from the investment fund, and thus, the investment fund was entitled to damages under the unambiguous terms of the agreement. (May 3, 2019)
In GBForefront, L.P. v. Forefront Management Group, LLC, the United States Court of Appeals for the Third Circuit examined whether, when assessing diversity jurisdiction, the citizenship of a traditional trust is determined in the same way as the citizenship of a business trust. The court held that the citizenship of a traditional trust is based upon its trustee’s citizenship, whereas the citizenship of a business entity called a trust is based on that of its constituent owners. (April 19, 2018)
In Crown v. Kobrick Offshore Fund, Ltd., the Massachusetts Appeals Court addressed whether Massachusetts public policy recognized a subscription agreement’s indemnification provision, which held the investor liable to the hedge fund for legal fees arising out of any false representations made by the investor in the agreement or out of any action for securities law violations brought by the investor. While the investor’s underlying action against the hedge fund for securities law violations was ultimately unsuccessful, because the Massachusetts Uniform Securities Act generally favors protection of investors, the court held that Massachusetts public policy favors rendering the indemnification provision unenforceable. (April 24, 2014)